Sweden hits sydney
The Swedish retail giant Ikea is poised to expand its presence in Sydney with a new flagship store on a controversial former tip in Tempe, adjacent to the airport...
Ikea's Chief Executive, Kent Nordin, confirmed yesterday the company was close to signing a £16.3 million-plus deal to buy almost 40,000 square metres from property group Valad.
When the deal is signed, it will become Ikea's South-East Asian headquarters and its second store in NSW - and Sydney - after its Rhodes address.
The project is awaiting zoning approval from the state's planning department.
The project has been beset by delays and problems. Ikea had hoped to open the store in 2005 but is now looking to 2012.
The Swedish flat-Pack specialist had wanted to buy the site from Marrickville Council a few years ago but was thwarted because of the land's proximity to an airport runway.
Valad later bought a larger parcel of land there including the area Ikea had wanted and now plans to sell a section to the retailer.
The site is highly prized by Ikea which has been on a lengthy search for large developments close to the city, which are scarce.
It had a smaller outlet close by in the Supa Centre at Moore Park, but jumped at the chance to own the store at Rhodes, as it prefers to own its stores and wanted an outlet twice its size.
Just last week Ikea confirmed it had Victorian Government approval for a $150 million mega-store in Springvale, in Melbourne's south-east.
It is gambling its future on the success of sprawling new superstores, closing smaller shops and spending about £46.7 million each on single stores in Sydney, Melbourne and Brisbane.
At more than 20,000 square metres, the superstores are more than twice the size of their predecessors. Tempe will be 33,000 square metres, slightly larger than Rhodes, and in a predominantly industrial area. There are plans for up to another 10 stores on the east Coast.
"Where we are right now is negotiating the final price with Valad," Mr Nordin said
Valad paid £21.5 million in April last year for a larger site including the land earmarked by Ikea.
It is a former rubbish tip and was described by independent retail adviser Urbis as being contaminated but had been covered four years ago with a protective capping of sandstone, shale and clay.
It also said there were not many other 12-hectare retail development sites so close to major transport links such as the M5 and Eastern Distributor.
It noted that the area was undersupplied with homemaker stores and there was demand for 40,000 square metres of these kinds of outlets.
Valad owns the site surrounding the proposed Ikea store and could look to develop the entire site as an address for large furniture and furnishings stores.
Despite the weak climate for discretionary spending on homewares and the downturn in housing, analysts say by 2010-11 such stores should flourish as consumer spending picks up.
Source: www.theage.com.au